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5 Approaches to Finance Your Biz

Gone are the days when banks are the seemingly first (and on my opinion, the only) choice to finance a business. I remember when I was younger and my mother who is an Economics graduate who wanted to start a business used to lie awake at night, restless, thinking of all the requirements she had submitted to the loan officer at our local bank and wondering whether she could get that loan. As years pass, entrepreneurs get more creative and businesses seem to crop up. It's not major corporations who are the big players in the industry but small businesses which have been relentlessly trying to break into the mold.

If you're looking to get funding from banks nowadays for your startup, you might want to rethink your options. It's time to get a little more creative and less dependent on banks. Here are more ways to open your dream business without seeking bank financing.

Joint Venture - If you have some money put aside but still need more to open your business, you might want to explore this avenue. If you know of another entrepreneur who likes your ideas, it might be feasible for you to try this one out. A joint venture is unlike a partnership. This agreement is for an indefinite period of time. But like a partnership, parties are to share assets by contributing equity. The control over you business is equally divided as well as that of the expenses and revenues. This is a contractual arrangement between two companies which can be long or short-term based on the needs of the new company you will be venturing into.

Home Equity Lines of Credit - You can use your house as collateral for a revolving credit to finance your business. With a home equity line, you will be approved for a specific amount of credit. This credit limit would be dependent on factors such as your income, debts, financial obligations as well as your credit history.

Credit Cards - Small business owners who are already in business have their own business credit cards that they use to purchase items which are necessary for their enterprise. If you are just starting out, you might want to use your personal credit card to purchase items which you can get on deferred payments.

401k - You can also withdraw money from your 401k account. You would just need to assess whether you can pay off the penalties as well.

Bootstrap - You can ask for a loan from your parents, sibling, husband or wife for varying amounts just to get you started on your small business. You can apply for an additional job, part-time or full-time, and use your salary to funel money into your business.

Before making a decision, you have to weigh in your options and exercise prudence in doing so. Shop for the credit terms that would meet your needs but that won't pose undue financial risk.